Reflections - Never waste a good crisis

Never waste a good crisis

To catapult to the top

Dreams experienced in ‘deep sleep’ can be educative if we reflect on it. If the same theme repeats itself it is a bullhorn to act.  

There are primarily two kinds of dreams: one, that startles you awake; and the other from which you don’t want to awake too soon. In either case it is our subconscious playing out our aspirations and our fears which when heeded and interpreted correctly can be transformative.

Some years back there was one such dream having frequent reruns in my ‘deep sleep’. It related to not meeting monthly and quarterly business targets. I am sure many are afflicted with this kind of a dream. In my dream I have been falling short, gravely, and growing increasingly fearful of the call from the boss to explain myself.

The dream was a flashback to the recession of 2008-2011 triggered by the sub-prime housing crisis in the US and the global financial meltdown that followed with the collapse of Lehman Brothers on September 15, 2008 – a date imprinted in my memory.

We are in some form of recession with Covid-19 indefinite lockdown – governmental or self-imposed – which will have a bearing on meeting the weekly, monthly and quarterly target in our respective businesses.

How should we arm ourselves to face the potential, imminent and real recessionary effect on the economy and on our business?

1.   Crisis mindset: Winston Churchill has been quoted as saying, “Never waste a good crisis”. We need to internalize the spirit of this statement and act differently from the business-as-usual approach. Our attitude should be, ‘Here is a great opportunity to think deeper, harder, smarter to create opportunities for the business, and for whatever scaled down opportunities that exist, have strategies in place to get a disproportionate share.

2.   Being honest: With ourselves and everyone else who forms some intersect with our business to identify what really are the critical issues that need to be addressed urgently. This means being deliberate about what areas of our business we will let die so that the ones to be kept alive get all the support. Generating a consensus around the decision would be the test of management’s leadership chops.  

3.   Being humble: The recessionary environment would call for humility in the top management to be able to say ‘I don’t know’. To reach out to those who may have the answers. It could be the peer group in the industry or cross-industry to understand how they are responding to the ‘crisis’. It could be inviting suggestions, without creating a panic, from the stakeholders how the business needs to run differently. The customer-facing staff or the team on the ground can provide insights into customer anxiety and customer demands of the business or potential defaults in payments to the company.  

4.   Being wise: Identify the signs and nature of the slow down. Which segments are most affected relative to the others? How are customers reallocating their spends and their budgets? On what budget items are they continuing to spend, on which they have cut back, and which items have been eliminated from their shopping list? If it is a large company, the sample set for this research could well be the staff of the company, though a customer segment would provide superior insights.

5.   Nose to the grindstone: Instead of the team spending time in the office strategizing, better to save on overheads and get them out in the field with a clear mandate to learn what is happening, provide an interpretation, and suggest strategies and tactics to create new opportunities for the business or better value add to existing opportunities; each one must play the role of a business head and an entrepreneur if he or she needs to retain his or her job.  

6.   Feeling challenged by the team: In an economically weak environment the management will be challenged by their employees to show the light and the way forward. If the management response is not convincing the brighter lot would start looking out to their industry peers who seem to be getting it right and hot-footing it there further weakening the company’s response. If the way forward proposed by management is clear than we can expect ‘reverse brain drain’ further strengthening the company to respond to the crisis.

7.   Working smart: Having role models to imitate is a good starting point for strategizing. For instance, role playing what would Aditya Puri, MD, HDFC Bank, do in these circumstances? To deliver EBIT of 25% y-o-y for 25 years there had to be:

                                         i.    A definitive management style (no magic)

                                       ii.    Deeply held business truths

                                      iii.    Tested processes and practices that deliver

                                      iv.    Time in the field with the team

                                       v.    Setting strategy together but responsibility with individual

                                      vi.    Holding the team feet to the fire to deliver on the numbers

                                    vii.    Close monitoring of what’s working what’s not

                                   viii.    Avoiding analysis-paralysis and consensual decision making

                                      ix.    Providing clear direction and decisions

                                       x.    Treating time as an irreplaceable asset of business

                                      xi.    Gumption to say no to what industry was doing and saying yes to what appeared to be a calculated winner for HDFC Bank based on its innate strength and vision for the business.

Any good crisis should bring out the best from those who like challenging themselves, to catapult to senior positions in the business, which in good times they would have had to wait their turn. 

How Successful People Stay Calm

http://www.forbes.com/sites/travisbradberry/2014/02/06/how-successful-people-stay-calm/our emotions and remain calm under pressure has a direct link to your performance. TalentSmart has conducted research with more than a million people, and we’ve found that 90% of top performers are skilled at managing their emotions in times of stress in order to remain calm and in control.

If you’ve followed my work, you’ve read some startling research summaries that explore the havoc stress can wreak on one’s physical and mental health (such as the Yale study, which found that prolonged stress causes degeneration in the area of the brain responsible for self-control). The tricky thing about stress (and the anxiety that comes with it) is that it’s an absolutely necessary emotion. Our brains are wired such that it’s difficult to take action until we feel at least some level of this emotional state. In fact, performance peaks under the heightened activation that comes with moderate levels of stress. As long as the stress isn’t prolonged, it’s harmless.

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How (And Why) To Stay PositiveTravis BradberryContributor

New research from the University of California, Berkeley, reveals an upside to experiencing moderate levels of stress. But it also reinforces how important it is to keep stress under control. The study, led by post-doctoral fellow Elizabeth Kirby, found that the onset of stress entices the brain into growing new cells responsible for improved memory. However, this effect is only seen when stress is intermittent. As soon as the stress continues beyond a few moments into a prolonged state, it suppresses the brain’s ability to develop new cells.

“I think intermittent stressful events are probably what keeps the brain more alert, and you perform better when you are alert,” Kirby says. For animals, intermittent stress is the bulk of what they experience, in the form of physical threats in their immediate environment. Long ago, this was also the case for humans. As the human brain evolved and increased in complexity, we’ve developed the ability to worry and perseverate on events, which creates frequent experiences of prolonged stress.

Besides increasing your risk of heart disease, depression, and obesity, stress decreases your cognitive performance. Fortunately, though, unless a lion is chasing you, the bulk of your stress is subjective and under your control. Top performers have well-honed coping strategies that they employ under stressful circumstances. This lowers their stress levels regardless of what’s happening in their environment, ensuring that the stress they experience is intermittent and not prolonged.

While I’ve run across numerous effective strategies that successful people employ when faced with stress, what follows are ten of the best. Some of these strategies may seem obvious, but the real challenge lies in recognizing when you need to use them and having the wherewithal to actually do so in spite of your stress.

They Appreciate What They Have

Taking time to contemplate what you’re grateful for isn’t merely the “right” thing to do. It also improves your mood, because it reduces the stress hormone cortisol by 23%. Research conducted at the University of California, Davis found that people who worked daily to cultivate an attitude of gratitude experienced improved mood, energy, and physical well-being. It’s likely that lower levels of cortisol played a major role in this.

They Avoid Asking “What If?”

“What if?” statements throw fuel on the fire of stress and worry. Things can go in a million different directions, and the more time you spend worrying about the possibilities, the less time you’ll spend focusing on taking action that will calm you down and keep your stress under control. Calm people know that asking “what if? will only take them to a place they don’t want—or need—to go.

They Stay Positive

Positive thoughts help make stress intermittent by focusing your brain’s attention onto something that is completely stress-free. You have to give your wandering brain a little help by consciously selecting something positive to think about. Any positive thought will do to refocus your attention. When things are going well, and your mood is good, this is relatively easy. When things are going poorly, and your mind is flooded with negative thoughts, this can be a challenge. In these moments, think about your day and identify one positive thing that happened, no matter how small. If you can’t think of something from the current day, reflect on the previous day or even the previous week. Or perhaps you’re looking forward to an exciting event that you can focus your attention on. The point here is that you must have something positive that you’re ready to shift your attention to when your thoughts turn negative.

They Disconnect

Given the importance of keeping stress intermittent, it’s easy to see how taking regular time off the grid can help keep your stress under control. When you make yourself available to your work 24/7, you expose yourself to a constant barrage of stressors. Forcing yourself offline and even—gulp!—turning off your phone gives your body a break from a constant source of stress. Studies have shown that something as simple as an email break can lower stress levels.

Technology enables constant communication and the expectation that you should be available 24/7. It is extremely difficult to enjoy a stress-free moment outside of work when an email that will change your train of thought and get you thinking (read: stressing) about work can drop onto your phone at any moment. If detaching yourself from work-related communication on weekday evenings is too big a challenge, then how about the weekend? Choose blocks of time where you cut the cord and go offline. You’ll be amazed at how refreshing these breaks are and how they reduce stress by putting a mental recharge into your weekly schedule. If you’re worried about the negative repercussions of taking this step, first try doing it at times when you’re unlikely to be contacted—maybe Sunday morning. As you grow more comfortable with it, and as your coworkers begin to accept the time you spend offline, gradually expand the amount of time you spend away from technology.

They Limit Their Caffeine Intake

Drinking caffeine triggers the release of adrenaline. Adrenaline is the source of the “fight-or-flight” response, a survival mechanism that forces you to stand up and fight or run for the hills when faced with a threat. The fight-or-flight mechanism sidesteps rational thinking in favor of a faster response. This is great when a bear is chasing you, but not so great when you’re responding to a curt email. When caffeine puts your brain and body into this hyperaroused state of stress, your emotions overrun your behavior. The stress that caffeine creates is far from intermittent, as its long half-life ensures that it takes its sweet time working its way out of your body.

They Sleep

I’ve beaten this one to death over the years and can’t say enough about the importance of sleep to increasing your emotional intelligence and managing your stress levels. When you sleep, your brain literally recharges, shuffling through the day’s memories and storing or discarding them (which causes dreams), so that you wake up alert and clear-headed. Your self-control, attention, and memory are all reduced when you don’t get enough—or the right kind—of sleep. Sleep deprivation raises stress hormone levels on its own, even without a stressor present. Stressful projects often make you feel as if you have no time to sleep, but taking the time to get a decent night’s sleep is often the one thing keeping you from getting things under control.

They Squash Negative Self-Talk

A big step in managing stress involves stopping negative self-talk in its tracks. The more you ruminate on negative thoughts, the more power you give them. Most of our negative thoughts are just that—thoughts, not facts. When you find yourself believing the negative and pessimistic things, your inner voice says, “It’s time to stop and write them down.” Literally stop what you’re doing and write down what you’re thinking. Once you’ve taken a moment to slow down the negative momentum of your thoughts, you will be more rational and clear-headed in evaluating their veracity.

You can bet that your statements aren’t true any time you use words like “never,” “worst,” “ever,” etc. If your statements still look like facts once they’re on paper, take them to a friend or colleague you trust and see if he or she agrees with you. Then the truth will surely come out. When it feels like something always or never happens, this is just your brain’s natural threat tendency inflating the perceived frequency or severity of an event. Identifying and labeling your thoughts as thoughts by separating them from the facts will help you escape the cycle of negativity and move toward a positive new outlook.

They Reframe Their Perspective

Stress and worry are fueled by our own skewed perception of events. It’s easy to think that unrealistic deadlines, unforgiving bosses, and out-of-control traffic are the reasons we’re so stressed all the time. You can’t control your circumstances, but you can control how you respond to them. So before you spend too much time dwelling on something, take a minute to put the situation in perspective. If you aren’t sure when you need to do this, try looking for clues that your anxiety may not be proportional to the stressor. If you’re thinking in broad, sweeping statements such as “Everything is going wrong” or “Nothing will work out,” then you need to reframe the situation. A great way to correct this unproductive thought pattern is to list the specific things that actually are going wrong or not working out. Most likely you will come up with just some things—not everything—and the scope of these stressors will look much more limited than it initially appeared.

They Breathe

The easiest way to make stress intermittent lies in something that you have to do everyday anyway: breathing. The practice of being in the moment with your breathing will begin to train your brain to focus solely on the task at hand and get the stress monkey off your back. When you’re feeling stressed, take a couple of minutes to focus on your breathing. Close the door, put away all other distractions, and just sit in a chair and breathe. The goal is to spend the entire time focused only on your breathing, which will prevent your mind from wandering. Think about how it feels to breathe in and out. This sounds simple, but it’s hard to do for more than a minute or two. It’s all right if you get sidetracked by another thought; this is sure to happen at the beginning, and you just need to bring your focus back to your breathing. If staying focused on your breathing proves to be a real struggle, try counting each breath in and out until you get to 20, and then start again from 1. Don’t worry if you lose count; you can always just start over.

This task may seem too easy or even a little silly, but you’ll be surprised by how calm you feel afterward and how much easier it is to let go of distracting thoughts that otherwise seem to have lodged permanently inside your brain.

They Use Their Support System

It’s tempting, yet entirely ineffective, to attempt tackling everything by yourself. To be calm and productive, you need to recognize your weaknesses and ask for help when you need it. This means tapping into your support system when a situation is challenging enough for you to feel overwhelmed. Everyone has someone at work and/or outside work who is on their team, rooting for them, and ready to help them get the best from a difficult situation. Identify these individuals in your life and make an effort to seek their insight and assistance when you need it. Something as simple as talking about your worries will provide an outlet for your anxiety and stress and supply you with a new perspective on the situation. Most of the time, other people can see a solution that you can’t because they are not as emotionally invested in the situation. Asking for help will mitigate your stress and strengthen your relationships with those you rely upon.

More by me:

My bestselling book: Emotional Intelligence 2.0

What my company does: Emotional Intelligence Training

Emotional Intelligence Certification

The Great Repeatable Model

Many companies believe that constant reinvention is the key to remaining competitive in today's ever-changing market. But Chris Zook and James Allen, the leaders of Bain & Company's global strategy practice and authors of the new book, Repeatability: Build Enduring Businesses for a World of Constant Change, argue that companies should look first at what they are doing right. Their multiyear study of hundreds of organizations has led them to the belief that the best-performing companies maintain a simple, repeatable business model.


In the following excerpt from their book, Zook and Allen cite three successes that represent their model of repeatability -- India's tiffin tin, Ikea's Billy bookcase and Nike's swoosh.


What do a tiffin tin, a Billy bookcase, and Michael Jordan have in common?


Each is central to a business success story that transformed its market. Each is emblematic of a company that learned to replicate and adapt its early successes over and over, often for decades, in a world of constant change.


It is an uncommon message, perhaps, in a world so dominated by change, where siren-like voices of gurus, analysts, and pundits preach "reinvention" on the part of companies. We find the opposite. Our data shows that simplicity, focus, and mastering the art of continuous change nearly always trump strategies of radical change or constant reinvention. The complexity and disruption that result are the great "silent killers" of growth and can even lead to "binge and purge" cycles that ultimately weaken the core of businesses.


We find in our research that enduring success is not about the choice of market, but about the essential design of a company (a much more controllable variable) and about harnessing the power of continuous improvement and adaptation -- driving learning and competitive advantage deeper and deeper into the fabric of a business. Our book is dedicated to pinpointing the essential nature of those companies in tough and dynamic competitive arenas that have been able to change continuously in order to repeat their successes again and again. We call them the Great Repeatable Models.


Let us illustrate with three quick examples and then begin our journey in search of the secrets of the Great Repeatable Models.


The Dabbawallas of Mumbai


Visitors to Mumbai can be easily overwhelmed by the scale and pace of India's most densely populated city. Yet every day, amid the noise, traffic, and bustle, the 5,000 dabbawallas of the Nutan Mumbai Tiffin Box Suppliers' Charity Trust deliver 200,000 boxed lunches, cooked the same morning in people's homes or by special caterers, to the right people on time. At night, the system reverses, and the dabbawallas return the color-coded lunch boxes -- called dabbas -- to where they came from. The average box travels 60 kilometers on bikes, on trains, on pushcarts, and on foot and is handled by six different people.


Despite the complexity of this supply chain, the dabbawallas perform so well that the odds of delivering the wrong lunch to a customer are less than one in 6 million, a statistic that has drawn attention from operations specialists across the world and that conforms to Six Sigma quality levels. The distinctive deliverymen, dressed in white cotton uniforms and white caps, pride themselves on making deliveries in the severest conditions.


The service ethos is so strong, in fact, that when Britain's Prince Charles asked whether he could meet some dabbawallas, they insisted he schedule the meeting between delivery cycles. The association would look little changed to a time traveler from the 1890s, when Mahadeo Havaji Bacche founded it. The service ethos has certainly been there from the start. The lunch boxes and uniforms are largely the same. The bicycles, trains, and pushcarts haven't changed a lot either. But the barefoot dabbawallas don't ignore the march of progress; they have always been ready to take advantage of innovations. Today they all carry mobile phones and use them to coordinate deliveries and alert each other to problems. Orders are now taken on the Internet and by text messaging. The trust even tracks customer satisfaction levels through online customer polling. This careful blend of the old and the new has translated into enduring success. In the nearly 125 years since its creation, the association has become a constant fixture in Mumbai's food delivery business and is growing profitably at between 5 percent and 10 percent a year. It is a simple example of a repeatable success formula that has had to constantly adapt to change, but has driven the art of continuous improvement in its core to a high level. The combination has repelled every competitor in sight for over a century.


IKEA and the Billy Bookcase


From its iconic blue-and-yellow stores to its ubiquitous customer-assembled Billy bookcase, IKEA is one of the most recognizable and admired companies in the world. It turns over 23 billion euros from 626 million visitors to its 280 stores in more than 25 countries. In Europe, it is at least 12 times as large as its nearest competitor.


The core features of this hugely successful company have changed only incrementally since Ingvar Kamprad opened the first IKEA furniture stores in Sweden during the 1950s. Since those early years, all wooden furniture sold in the stores has been sold in flat packs for self-assembly by the customer, all stores have been built around a flow that encourages cross-selling, all products have been designed to hit a target selling price, and the company has carefully maintained an extremely egalitarian corporate culture. IKEA has not attempted to diversify into businesses that would require a different model, nor has it ever reinvented itself.


Instead, it has focused on maintaining those differentiations, making its economics more efficient and improving product design, on the one hand, and, on the other hand, carefully selecting new product categories and geographies where the model can work. Its ability to do this is based on the fact that everyone in the company has internalized a long-held set of relatively simple, transparent rules and principles -- so all decisions in the organization across all levels of employees tend to reinforce and improve the model. IKEA, therefore, is not a story of a search for hot markets -- furniture has been around for a long time -- it is a story of the development of a hot business model.


Some might view IKEA as a bit retro in a world of constant change -- furniture, retail, low technology. Yet, the truth is that this is a market with an enormous number of new entrants in each region of the world, lots of technology in supply chain and materials, new Internet sales models, and constant change in consumer needs. The IKEA repeatable model -- as with the dabbawallas -- has adapted and endured and constantly learned and improved, while others have failed to do so. The business has mastered the art of continual change and continual improvement.


The Swoosh of Nike


Nike, Inc. defines athletic innovation, speed, and constant change. It is one of the cases that started us on our path to repeatable models. In twenty-five years, from 1986 to 2011, Nike, Inc. has grown from less than a billion dollars in size to nearly $21 billion, with EBIT of $2.8 billion. Nike has averaged a 20 percent annual total return to shareholders over the entire twenty-five-year period. If you had invested $100 in Nike in 1984, it would be worth more than $10,000 today. Not bad performance in a market that is time and time again defined as low growth and commodity-based. Nike's repeatable model is built on four core interlocking capabilities: (1) brand management (the ubiquitous swoosh), (2) athlete partnerships, (3) award-winning design and use of new materials, and (4) an efficient supply chain to Asia (it owns no manufacturing assets). In 1989, Nike and its main rival, Reebok, were comparable in size, product line, brand recognition, and profitability. Yet, Reebok never found a repeatable formula -- careening from Ralph Lauren footwear to Boston Whaler boats, to Western boots, to golf clothing. As a result, Reebok did not create a learning organization as it jumped from one idée du jour to another, and it created virtually no economic value in the stock market for two decades until it was sold in 2006 to Adidas. Meanwhile, Nike posted a record-setting performance, redefined the rules of the game of its industry, and reshaped and enlarged the global profit pool that supports it.


What is especially interesting about the Nike example is the direct head-to-head comparison with a rival. Reports at the time were referring to the pair with phrases like "Coke vs. Pepsi," "in an intense race for America's footwear," "neck and neck," and so on. Yet, the repeatable model of Nike, and its relentless ability to innovate and improve year after year, prevailed over one that was not so, while fending off new challengers in a dynamic market that has seen monumental changes in the economics of sports, dramatic shifts in media, channel evolution, and the Internet, and the advent of new materials technology and supply chain patterns.


Three companies on three continents in three very different markets. Each -- furniture, athletic shoes, food delivery -- looks like a commodity on the surface, yet a closer look shows that each actually has had enormous change to deal with on many dimensions, from customer needs to channel shifts to technology to the Internet. Yet, each has managed to adapt, to continuously improve, and to fend off a constantly changing onslaught of competitors. On the surface, businesses like IKEA do not look that mysterious, but no competitor has come close.


Only IKEA, it seems, knows how to imitate IKEA. On the face of it, this is a paradox. Yet ...  long-term success actually requires a foundation of enduring and stable core principles. Without the stabilizing effect of a set of core strategic and organizational principles, companies can fall prey to a form of "corporate ADD" (attention deficit disorder) that dooms them to cycles of destruction and reinvention and the endless search for the hot market that will propel them miraculously to a better world. In their quest for some kind of silver bullet, many companies have not built up the muscles of constant improvement and focus. The extremes of such behavior are not that common -- how could they be? -- but the more subtle and pernicious versions of it are everywhere.


[In Repeatability,] you will encounter companies that took the road less traveled and created Great Repeatable Models to achieve sustained performance in a wide range of circumstances. Some, like Nike, IKEA, Tetra Pak, and Olam, have been developing and refining their Great Repeatable Model from the very beginning. Others, like LEGO, are classic cases of management teams that prematurely abandoned their repeatable model, only to discover that their best hope was to return to it with new vigor and renewal. And still others, like DaVita, used these ideas to take a near-bankrupt company, yet one with strong underlying assets and a history of a repeatable model, and renew its growth and vitality.


Let's begin with the research.


The Search for Profitable Growth


Sustained and profitable growth is rare and becoming increasingly so. A decade ago, we found that only about 13 percent of companies in the world had achieved, on average, even a modest rate of profitable growth (5.5 percent in real terms) over the decade while also earning their cost of capital. In the last decade, ending in 2010, the percentage had dropped to only 9 percent -- this despite the fact that well over 90 percent of companies aspire to this level of performance in their strategic plans.


Our work on repeatable models caps a ten-year project that we have undertaken at Bain & Company on the changing origins of profitable growth and the methods for capturing it. We are finding that it is much less about the choice of hot market than about the how and the why of strategy and the business model that translates it into action. Moreover, we find that strategy is becoming less and less about a rigid plan to pursue growth markets than about developing a general direction built around deep and uniquely strong capabilities that constantly learn, continuously improve, test, and adjust in manageable increments to the changing market (as opposed to hesitancy followed by an anxious rush to make up for lost time).


Reprinted by permission of Harvard Business Review Press. Excerpted from Repeatability: Build Enduring Businesses for a World of Constant Change by Chris Zook and James Allen. Copyright 2012 Bain & Company, Inc.